On 25 May 2022, DNB announced an increase in the countercyclical capital buffer (CCyB) to 1%. DNB now confirms its decision to continue the build-up of the CCyB to 1%. Accordingly, banks with loans outstanding in the Netherlands must to comply with this requirement by 25 May 2023.Read more
Implementation of the European Covered Bonds Directive in Dutch law
Below DNB explains the implementation of the European Covered Bonds Directive into the Financial Supervision Act (Wet op het financieel toezicht – Wft) and the Decree on Prudential Rules for Financial Undertakings (Besluit prudentiële regels Wft – Bpr). As a download, we provide the up-to-date list of banks that are authorised to issue covered bonds under a covered bond programme and of the labels they may use for the covered bonds.
Below, we discuss the consequences of the entry into force of the new laws and regulations for covered bonds on 8 July 2022 on DNB’s supervision of covered bond programmes.
From 8 July 2022, a distinction will be made between i) existing programmes not adapted to the new laws and regulations, ii) existing programmes adapted to the new laws and regulations and iii) new programmes. In addition, DNB’s regular supervision will also change.
i. Existing programmes not adapted to the new laws and regulations
If a covered bond programme is not adapted to the new laws and regulations, the initial approval decision which DNB took at the time of the programme’s registration remains in force. The issuance caps and backbook ratios imposed at the time of registration and subsequently has confirmed or revised in the annual review will no longer apply, given that Section 40i of the Bpr – the provision on healthy balance sheet ratios – has been removed. Of course, attention will be devoted to asset encumbrance in a broader sense as part of DNB’s ongoing prudential supervision, particularly in the SREP.
Covered bonds issued before 8 July 2022 under an existing programme are governed by the transitional regime as referred to in Section III of the Covered Bond Directive Implementation Act (“Implementatiewet richtlijn gedekte obligaties”). No new issues can be made under a covered bond programme not adapted to the new laws and regulations as of 8 July 2022, as also stated in the list of banks and covered bonds that DNB publishes pursuant to Section 1:109 of the Wft.
If an institution makes changes to an existing programme at a later date, it must inform DNB accordingly.
ii. Existing programmes adapted to the new laws and regulations
Covered bond programmes that are adapted to the new laws and regulations are in principle not subject to a new prior approval decision from DNB. This means that for these adapted programmes, DNB’s initial approval decision upon registration of the programme remains in force. The issuance caps and backbook ratios imposed at the time of registration and subsequently confirmed or revised in DNB’s annual review will no longer apply, given that Section 40i of the Bpr – the provision on healthy balance sheet ratios – has been removed.
However, for the purposes of the ongoing supervision of covered bond programmes, DNB will assess whether these programmes comply with the new laws and regulations. DNB expects this assessment to be efficient, given that the new legislation and regulations are to a large extent similar to the old legislation and regulations. DNB has drawn up a self-assessment form which has already been made available to the banks (either via the DACB or otherwise) and can also be downloaded below. In the form, banks can clarify how the programme complies with the new legislation and regulations and what the changes are compared to the old legislation.
If the assessment shows that the programme complies with the new laws and regulations, DNB will confirm this by means of an amendment decision. DNB will then also include the programme in the list of banks and covered bonds published pursuant to Section 1:109 of the Wft.
iii. New programmes
For the assessment of new programmes to proceed efficiently as possible, institutions must notify DNB in good time of their intention to set up a new programme. In this preliminary stage, DNB will consider whether the new programme is appropriate from a prudential perspective. Subsequently, DNB will check whether it complies with the new laws and regulations when the institution submits its formal request for approval. To submit a formal request, the institution must complete a self-assessment form.
iv. Regular supervision
With the entry into force of the new legislation and regulations, DNB will also adjust its regular supervision. In contrast to the previous supervisory practice, DNB will no longer review covered bond programmes on an annual basis. Based on the information to be provided under the old or new legislation, DNB will apply a risk-based approach and may come up with questions at any point in time.
v. Up-to-date list of covered bond programmes
Pursuant to Section 1:109 of the Wft, DNB publishes an up-to-date list of the banks that are authorised to issue covered bonds under a covered bond programme. The list must also include the covered bonds eligible to use the label "European covered bond" or the label "European covered bond (premium)", as referred to in Article 27 of the Covered Bonds Directive. However, based on the Dutch implementation of the Covered Bonds Directive, a covered bond programme issued by a bank in the Netherlands can only use the label "European covered bond (premium)" as referred to in Article 27 of the Covered Bonds Directive. The list can be downloaded below.
If you have any questions regarding the above, please submit them to your regular contact person by email, with a copy (cc) to: P-OSBE_BE_CoBo_Kapitaal-SRT-STS@dnb.nl.
- Up-to-date list of banks and covered bonds (only available in Dutch) (28 September 2022 | 13KB XLSX)
- Self-assessment form for adaptation of existing programmes to new laws and regulations (only available in Dutch) (11 July 2022 | 165KB XLSX)
- Self-assessment form for new programmes (only available in Dutch) (11 July 2022 | 164KB XLSX)